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Price action is dumb, and you're lazy for thinking otherwise

  • #261
  • Jul 27, 2011 2:24pm Jul 27, 2011 2:24pm
I am a big fan of price action, support/resistance. I could care less about H&S patterns. However,I was reading an article where a trader was describing a H&S play.....when I looked at the chart, I realized that it was a pattern I liked a lot, but I did not call it a H&S. My basis for entry had nothing to do with knowing anything about a H&S. I play this play all the time, but on this one occasion, it just happened to appear as a H&S. We can all look at the market from many different perspectives (including Calculus) and still make money.
  • #262
  • Jul 28, 2011 1:55am Jul 28, 2011 1:55am
Quoting superdezign
Using price action as a method of entry/exit is ridiculous, You can't use a single variable to predict itself. Technical analysis falls under the same category of invalidated trading.
TA works just fine for me.

Another thread that proves little except that one man's trash is another man's treasure, and that there are very few absolute truths in trading.
  • #263
  • Edited 3:25am Jul 28, 2011 3:13am | Edited 3:25am
Quoting Porkpie
The problem I have with this tomato market blank screen theory is, even with the humble tomato retailer, he/she knows that the market is subject to demand and supply and trends in tomato consumption. he/she will know if he has a glut of tomatoes and needs to shift a load what price he will be able to sell those tomatoes at based on past experience/performance and current trends, and shifts in trends. Same with currencies. So ask yourself, what does this look like on a chart. Retailers don't expect to be right every time. Just go around the back...
Thanks for that. interesting

“My perception is my reality and unless and until I see things differently then that’s how it is..for me”

As you know the market is not only driven by supply and demand but also political fallout and economic situations.
All mixed up in Micro and macro.

So supply/demand mixed with a shed load of FEAR and GREED which effects supply/demand.
When a price is perceived to high buyer/holder will sell, flood the market with supply and price drops.
When it’s to low the masses buy and supply is limited and the price rises.

So for me it’s this simple. S&D or price action or whatever we decide to call it.

Back to tomato market. The thing with indicators is they have a place as MARKET RESEARCH.
What has been...
They may help the tomato seller determine past behaviour and therefore the possibility of this behaviour repeating itself.
What it doesn’t do it give you absolute certainty and that is why indicators can lead you to the poor house.

Sorry about the weird font.... anyway thats me with this thread... cheers
  • #264
  • Jul 28, 2011 5:00am Jul 28, 2011 5:00am
I think superdezign abandonded his baby... Maybe FF will toss into the trash bin soon.

I have observed that for the most part, people responding are NOT attempting to have a discussion along the lines of the OP's intent. He has asked that if you have a TA system, can you provide an explanation, based on LOGIC, as to WHY it works, including WHAT parameter you are using as the basis of your indicator or system.

Other than his bad choice of a title, he made it clear, MORE THAN ONCE, that he is not out to bash TA. He is just interested in hearing if ANYONE can provide a LOGICAL explanation of the HOW and WHY of the success of their TA system. That is all he has asked. His personal experience has taken him to the conclusion that TA is not based on any LOGICAL scientific type of foundation. But if someone, ANYONE, could provide him just one example with SOUND REASONING that his conclusion is flawed, I thnk he would have another another look at TA based on this explanation.

Why are so many of you jumping up-and-down and screamig how successful you are and how he doesn't know anything about TA blah, blah, blah? THAT IS NOT THE TOPIC HERE!!!!! Absolutely TERRIFIC that some of you have a system that is making shiploads of $$$$. THAT IS NOT THE TOPIC HERE!!!! HOW does your system give you an edge, and WHY is it able to do that, using logical reasoning.

DrDave
To free Gazans of Hamas, use whatever it takes.
  • #265
  • Jul 28, 2011 5:44am Jul 28, 2011 5:44am
Quoting DrDave
I think superdezign abandonded his baby... Maybe FF will toss into the trash bin soon.

I have observed that for the most part, people responding are NOT attempting to have a discussion along the lines of the OP's intent. He has asked that if you have a TA system, can you provide an explanation, based on LOGIC, as to WHY it works, including WHAT parameter you are using as the basis of your indicator or system.

Other than his bad choice of a title, he made it clear, MORE THAN ONCE, that he is not out to bash TA. He is just interested in hearing...
Correct that's what i'm thinking too when i read superdezign first post. But i don't know what is going on after that so many post come out of the topic. But any way we can see something here and learn about people responds.

Peace,

KG
  • #266
  • Jul 28, 2011 5:54am Jul 28, 2011 5:54am
Quoting DrDave
I think superdezign abandonded his baby... Maybe FF will toss into the trash bin soon.

Why are so many of you jumping up-and-down and screamig how successful you are and how he doesn't know anything about TA blah, blah, blah? THAT IS NOT THE TOPIC HERE!!!!! Absolutely TERRIFIC that some of you have a system that is making shiploads of $$$$. THAT IS NOT THE TOPIC HERE!!!! HOW does your system give you an edge, and WHY is it able to do that, using logical reasoning.

DrDave
Patterns that were evident last year can be seen again this year, and patterns that appeared yesterday resurface today. You won't find a mathematical proof for this assertion, but empirical examples abound in every successful trader's track record.

I've expressed my view several times regarding indicators, and to some extent I agree with @SuperDezign: you should know what you are doing with indicators.
One of the differences I see between PA and TA, is that the latter is quantifiable - that's what indicators were developed for. A trader looking at a naked chart may be impressed by the extent of a move, range of a pair, or accelaration of price. A technical analyst, in contrast, would use indicators to measure these moves, and quantitatively compare them to historical patterns.

But again: generally speaking, both TA and PA work under the assumption that history repeats itself. Of course, the long and winding road from that assertion to producing a winning trading system, is not without obstacles.
  • #267
  • Jul 28, 2011 6:28am Jul 28, 2011 6:28am
Quoting DrDave
I think superdezign abandonded his baby... Maybe FF will toss into the trash bin soon.

I have observed that for the most part, people responding are NOT attempting to have a discussion along the lines of the OP's intent. He has asked that if you have a TA system, can you provide an explanation, based on LOGIC, as to WHY it works, including WHAT parameter you are using as the basis of your indicator or system.

Other than his bad choice of a title, he made it clear, MORE THAN ONCE, that he is not out to bash TA. He is just interested in hearing...
He has said he wouldn't share his methods yet he and others like you expect everyone else to spoon feed you years of our hard work for free.

He said every TA trader he spoke with couldn't explain why their method worked, HE hasn't been speaking to the right traders.

Now I have worked out how to trade TA profitably he wouldn't be prepared to pay me to learn my methods so he will have to sing for the info.

Get real.
  • #268
  • Jul 28, 2011 6:37am Jul 28, 2011 6:37am
no one who spent at least a few months on ff should be surprised how this thread played out from the title and the first few posts on, if one could buy or sell threads i would have sold it heavily right from the start, when darkstar and the like showed up it gained downward momentum, the crowd jumped on the bandwagon. (btw didn't darkstar meet your expectations of a logical reply? i find it funny that of all the posters you ignored him.) only since yesterday and since superdezign refrained from responding had the selling receded and it was time to start a discussion with the people who are interested in a serious conversation, here was the indication to exit my short position and start accumulating ...

however, it's interesting why superdezign stepped forward with all this, obviously he has found something meaningful to him and i would be glad to hear about his approach to the market and why he thinks his method or logic is superior to technical analysis, unless this really was just an ego stroking exercise or even a social experiment.

the question is why should we provide you with an explanation why our method works (according to your rules) when you are not willing to share your own insights about what you think is the correct way to approach the markets?

nonetheless, i'm glad you started this thread, because there were some valuable posts from people from which i could learn and second it got me thinking, so thanks for that.
Invincibility lies in the defence, the possibility of victory in the attack
  • #269
  • Jul 28, 2011 7:40am Jul 28, 2011 7:40am
Quoting silverheat
no one who spent at least a few months on ff should be surprised how this thread played out from the title and the first few posts on, if one could buy or sell threads i would have sold it heavily right from the start, when darkstar and the like showed up it gained downward momentum, the crowd jumped on the bandwagon. (btw didn't darkstar meet your expectations of a logical reply? i find it funny that of all the posters you ignored him.) only since yesterday and since superdezign refrained from responding had the selling receded and it was time...
yeah like at some point it should just self destruct
  • #270
  • Jul 28, 2011 7:51am Jul 28, 2011 7:51am
Quoting silverheat
no one who spent at least a few months on ff should be surprised how this thread played out from the title and the first few posts on, if one could buy or sell threads i would have sold it heavily right from the start, when darkstar and the like showed up it gained downward momentum, the crowd jumped on the bandwagon. (btw didn't darkstar meet your expectations of a logical reply? i find it funny that of all the posters you ignored him.) only since yesterday and since superdezign refrained from responding had the selling receded and it was time...
i like this thread , some of the best people on FF have shown up in one space in a fairly fast time frame...now if we could just get superdezign to offer up a sound and logical premise re. WTF he's on about and hopefully his trading stategy ( as Silverheat has suggested so eloquently above... thank the gods for sound Swiss economic input, i really like that input ) it could become very popular. Possibly more so than Amazing Strategy or Charts on Drugs.
Dread the thought superdezign moves to the music room, what would we get then? Andy Pandy V. Muffin the Mule...ft. Whotsit Montana
All systems of divination, like music itself,work through patterns.
  • #271
  • Jul 28, 2011 8:28am Jul 28, 2011 8:28am
So, many a time I wonder to myself if to be succesful as a trader we need not predict. Yet many say we cannot predict but guestimate, "its all probability blablabla...". But, we must also "position ourselves" before the rest.

"How do you build a system, that does not require of prediction, but at the same time requires of anticipating a move?"
  • #272
  • Jul 28, 2011 8:53am Jul 28, 2011 8:53am
The very first words in my post
Quote
I have observed that for the most part...


That was intended to EXCLUDE posters such as darkstar without me needing to enumerate them. Maybe the OP missed darkstar’s reply, or was just fed up with the haters and bashers and stopped replying to the “legit” postings.

Anyway, why does anyone think that in order to present a logical explanation of just ONE SINGLE INDICATOR being used in his SUCCESSFUL TA system would reveal his entire system? Unless, of course, that single indicator IS his system, and then it is understandable that he wouldn't want to share details.

Let's say one is using a moving average (please replace "moving average" with any other TA indicator). The OPs question is (let me repeat it again, for those that keep closing their eyes to anything except “I want your system to make it mine!”) simply SHOW the LOGIC behind HOW you are using the indicator. For example, if you say one of my rules is based on buying only if price has closed above the MA, what EVIDENCE do you have that this is a sound thing to do? Maybe you HAVE a shipload of statistics to support it. If so, what are they? It is possible that your use of the MA is indeed SCIENTIFICALLY valid. Thus far, the majority of posts to the thread do not even make an attempt to provide ANY evidence that any TA indicator has sound science that supports its use/results. On the other hand, it could be that your interpretation of the data is flawed, hence your conclusion that you have a scientifically valid indicator is incorrect.

Considering the dearth of posts with the evidence, I suspect almost no one has the evidence. So rather than addressing the thread topic, one attempts to deflect the subject and turns thread bashing in all the various forms that we see here.

@silverheat I think that if you want to have a discussion with superdeizgn about his system, this thread is the wrong place. He already said his is not based on TA, because in HIS EXPERIENCE AND RESEARCH, there is no scientific evidence to support TA being valid. So puh-lease, can everybody just drop the idea of getting into an OFF-TOPIC discussion about superdezign’s system?

DrDave
To free Gazans of Hamas, use whatever it takes.
  • #273
  • Jul 28, 2011 8:59am Jul 28, 2011 8:59am
IMO the purpose of the original argument was that most traders do not know the science behind their indicators. This is like asking an engineer whether or not he/she knows how to derive the formula for the area of a circle on the fly -- Pie-R-Squared (sorry no scientific symbols for pie available). I have set in on classes and have witnessed a professor derive the formula for Pie-R-Squared, but I couldn't do it off the top of my head. Frankly, it is completely useless in everday usage. Just like, it is completely useless for a trader to be able to derive the equation for an exponentail moving average. Who cares? Just use it.
  • #274
  • Jul 28, 2011 9:01am Jul 28, 2011 9:01am
Quoting Pipalicious
So, many a time I wonder to myself if to be succesful as a trader we need not predict. Yet many say we cannot predict but guestimate, "its all probability blablabla...". But, we must also "position ourselves" before the rest.

"How do you build a system, that does not require of prediction, but at the same time requires of anticipating a move?"
The same way that insurance companies use DATA TABLES and STATISTICS to give them boundaries within which they can operate to make a profit wihting a certain risk window. Don't insurance companies take LOSSES every day? Hmmm, then just maybe they have some SCIENCE behind decidng how much to charge for insurance premiums under various conditionns such that the $$$ coming in exceed the $$$ that they already know they will be paying out ON A STATISTICAL MODEL, over various time periods. And guess what, insurance compies blow up! Yeah! The information on which they base their business model may be perfectly sound. But they are in a business of RISK taking. And a few get a margin call and no $$$ left to pay it.

Sound like TRADING?

DrDave
To free Gazans of Hamas, use whatever it takes.
  • #275
  • Jul 28, 2011 9:02am Jul 28, 2011 9:02am
Quoting DrDave
So rather than addressing the thread topic, one attempts to deflect the subject and turns thread bashing in all the various forms that we see here.
And this sir, is the reason why (a) forums like this contain mostly crap, (2) most in fact dont know what they are doing, their ego/arrogance gets in the way, and (3) they turn to bashing and nonsense.

Pathetic really...
  • #276
  • Jul 28, 2011 9:02am Jul 28, 2011 9:02am
Quoting Pipalicious
So, many a time I wonder to myself if to be succesful as a trader we need not predict. Yet many say we cannot predict but guestimate, "its all probability blablabla...". But, we must also "position ourselves" before the rest.

"How do you build a system, that does not require of prediction, but at the same time requires of anticipating a move?"
Since you don't move the market, there is no way to get in before the rest. By "the rest" I mean large orders moving the market. They are far superior and you are no match.

So the next alternative is how quickly can you recognize the move and join them. The same applies for exiting the trade.

Let us look at the two extremes. You can jump in every couple of seconds/minutes to get in as early as possible or you can wait until a move is established and then join the trend.

It is between these two extremes that YOU need to find a balance. This will vary depending on a couple of factors. Do you have the time to trade full time or can you only check the charts once a day. Jumping in quickly can get you stopped out very quickly depending on your risk and exit criteria. Risk is a major factor to consider.

Cool Runnings...
  • #277
  • Jul 28, 2011 9:05am Jul 28, 2011 9:05am
Quoting DrDave
The same way that insurance companies use DATA TABLES and STATISTICS to give them boundaries within which they can operate to make a profit wihting a certain risk window. Don't insurance companies take LOSSES every day? Hmmm, then just maybe they have some SCIENCE behind decidng how much to charge for insurance premiums under various conditionns such that the $$$ coming in exceed the $$$ that they already know they will be paying out ON A STATISTICAL MODEL, over various time periods. And guess what, insurance compies blow up! Yeah! The information...
I correlate insurance companies more to option sellers.

They receive a premium and if x happens they lose.

In the end, the insurances RR is skewed, thousands upon thousands of "small" fees, when they get a call they pay out a lot more than what they bring in from that one customer.

So, if trading with huge risk/small reward then yes, it is like trading.

My opinion of course.
  • #278
  • Jul 28, 2011 9:11am Jul 28, 2011 9:11am
Quoting DrDave
The very first words in my post

That was intended to EXCLUDE posters such as darkstar without me needing to enumerate them. Maybe the OP missed darkstar’s reply, or was just fed up with the haters and bashers and stopped replying to the “legit” postings.

[color=black][font=Verdana]Anyway, why does anyone think that in order to present a logical explanation of just ONE SINGLE INDICATOR being used in his SUCCESSFUL TA system would reveal his entire system? Unless,...
Puh..lease! This thread has been a comedy since OP , ...and you are still trying to take it seriously. Can't you recognise humour when its staring you in the face ?
All systems of divination, like music itself,work through patterns.
  • #279
  • Jul 28, 2011 9:13am Jul 28, 2011 9:13am
Quoting PiptheRipper
So the next alternative is how quickly can you recognize the move and join them. The same applies for exiting the trade.

It is between these two extremes that YOU need to find a balance.
Hmm...yes I see what you mean, and I also agree.

The issue here is like you said that "fine line".

Trends by themselves (depending upon definition...!) are mostly "after the facts". So this in itself (again...depending on definition) will no matter what get you in late, no matter how many hours you are in front of the screen (my opinion).

Its that fine balance in identifying the initiation of a "valid" movement that wont move against you and become chop or complete reversal.

In the end, all we require is of movement, which can be seen continually all day every day. My question is:

1) What "type" of movement is the "correct" movement.

2) How do we identify this "correct movement" in its infancy...not to premature...not too late...the sweet spot.

(talkin out loud here...)
  • #280
  • Jul 28, 2011 9:15am Jul 28, 2011 9:15am
Quoting Troikaone1
IMO the purpose of the original argument was that most traders do not know the science behind their indicators. This is like asking an engineer whether or not he/she knows how to derive the formula for the area of a circle on the fly -- Pie-R-Squared (sorry no scientific symbols for pie available). I have set in on classes and have witnessed a professor derive the formula for Pie-R-Squared, but I couldn't do it off the top of my head. Frankly, it is completely useless in everday usage. Just like, it is completely useless for a trader to be able...


I think another one that has missed the point. Who said that you need to understand the derivation of our indicator? As you said correctly “Just use it”. But the topic question is HOW are you using it? Do you place on end on a swing bar, then generate a random number onto which to place the other end? Hey, if so, that sounds a little bit SCIENTIFIC! You used a random number generator. OK, but the basic question comes back to WHY and HOW did you decide that it gives you an edge to position your EMA this way? If oyu have an answer like, “well, I have this gut feeling that it works. Plus, I had 6 of 10 trades that were in my favor.” That is at least a start!

Would you like to hear that a surgeon made 3 successful appendectomies on live pigs, and 2 more on cadavers, so now he is a “successful, no-loss” surgeon for appendectomies? You got some “statistics” right there to back up his claim of being a “no-loss “expert”. Why do I think you would immediately see that as preposterous? Because that “evidence” is hardly sufficient to support the claims. So why are so many people that post here so unwilling to take at look at even one of their own TA indicators and see if there is some valid science that supports the given method of use.

DrDave
To free Gazans of Hamas, use whatever it takes.
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